Brian Snyder/Reuters
- Wealthfront, the California investing startup, is adding risk parity to its suite of investment solutions.
- The portfolio strategy was first created by Bridgewater Associates, the hedge fund overseeing $119 billion in assets.
Wealthfront is offering a flagship strategy of the largest hedge fund in the world to its customers.
The California roboadviser, which manages more than $10 billion in assets, is adding risk parity, a strategy used in one of the largest funds overseen by Bridgewater Associates, a hedge fund with $119 billion in assets founded by Ray Dalio.
Risk parity, a portfolio strategy that focuses on allocating risk, was first brought to market via Bridgewater's All Weather Fund, which launched in 1996.
The All Weather strategy made a 3.5% gain in the third quarter of 2017, according to Business Insider hedge fund correspondent Rachael Levy. Its returns have varied over the years, and as of the end of September the fund managed $53 billion, according to a person with knowledge of Bridgewater's assets.
Risk parity is the newest addition to Wealthfront's PassivePlus suite of investment solutions. Other features that make up PassivePlus include tax loss harvesting, direct indexing, and smart beta.
"Wealthfront's PassivePlus marries decades of academic insights with technology to deliver disciplined investment approach that helps our clients achieve their financial goals," Dr. Jakub Jurek, Wealthfront's VP of research, said.
"Our launch of Risk Parity demonstrates that even more sophisticated strategies can be deployed via software in a cost-effective manner."
Wealthfront has been building out its offerings since it landed $75 million in a fundraising round led by Tiger Global, the New York investment fund. The company announced a feature earlier this year that helps users navigate the home buying process, for instance.
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